Non-U.S. developed markets declined modestly in the quarter, although performance was mixed. Higher oil prices helped energy lead returns, and defensive segments also did well. Small-caps bore the brunt of the volatility late in the period. Markets reliant on commodity exports performed best, while some peripheral European markets suffered the largest declines.
The International Discovery Fund returned −1.24% in the quarter compared with −0.69% for the S&P Global ex-U.S. Small Cap Index and −1.36% for the Lipper International Small/Mid-Cap Growth Funds Average. For the 12 months ended June 30, 2016, the fund returned −3.55% versus −4.97% for the S&P Global ex-U.S. Small Cap Index and −5.58% for the Lipper International Small/Mid-Cap Growth Funds Average. The fund's average annual total returns were −3.55%, 6.39%, and 6.17% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 1.20% as of its fiscal year ended October 31, 2015.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The International Discovery Fund charges a 2%
redemption fee on shares held 90 days or less.
The performance information shown does not reflect the deduction of the redemption fee;
if it did, the performance would be lower.
The portfolio's underweight to the energy and materials sectors weighed on results in the quarter and also had a noticeable effect on our regional results, as we were underweight in resource-heavy Canada. We remained overweight in faster-growing segments, such as consumer discretionary, information technology, and health care.
Several of our leading holdings based in the UK suffered from the sell-off that followed the Brexit vote. The impact of the vote remains unknown since political decisions will affect the outcome. However, we expect that it will most likely lead to continued low global growth and interest rates. Such an environment would favor higher-quality and growth-oriented stocks, which may benefit our approach. In any case, we have retained our focus on such stocks, and we continue to believe that firms able to deliver compounded growth over the long term will outperform the market.